Disney asks FCC for restrictions on AOL-Time Warner deal

Disney told the U.S. Federal Communications Commission in a filing late today that the merged AOL Time Warner should be "unequivocally" prohibited from discriminating against any unaffiliated content or Internet service providers.

The FCC "must impose meaningful and enforceable conditions prior to any possible approval of the merger," Disney said.

Disney's filing is the latest action in its battle with Time Warner. Last week, Time Warner blocked ABC TV stations in 11 cities for a day and a half after failing to agree with Disney on terms for carrying the stations.

Consumer groups said the cable dispute raised concerns over Time Warner's control over the so-called broadband connection into millions of homes, which allows consumers to get telephone, video and Internet services over the cable TV lines. Disney repeated those fears in its FCC filing.

Disney said AOL Time Warner would control the broadband link, as well as the "vast and crucial content" distributed over the network, such as America Online's service and Time Warner's cable channels, including HBO and CNN.

"Such an amalgamation of assets gives the merged entity the incentive and ability to act as a 'gatekeeper'--to favor its own content and disfavor the content of unaffiliated content providers," Disney said.

"As we made clear on the day our merger was announced, the commitment of AOL and Time Warner to open access and content diversity couldn't be stronger," said Kathy McKiernan, an America Online spokesman.

USA Networks, which produces programming such as the USA Network and Home Shopping Network for cable TV, has warned that permitting the combination could hurt diversity.

"There's been too little attention to the consequences of that much consolidation and the ability to have that many voices cross-promoting (each other) and cutting out other voices," USA Networks chairman Barry Diller said at an industry conference Tuesday.

Separately, CMGI's iCast, which provides instant messaging technology to consumers, told the FCC last month that AOL Time Warner would hurt the market for such services, which lets people chat online in real time. It has become a popular Web activity because it alerts people when friends are online.

iCast said America Online continues to block messages from consumers using rival instant messaging technology. It asked the agency to require the new company to open its instant messaging service and to require compatibility with messaging products from other companies. iCast and Tribal Voice, which makes instant messaging technology, sent about 2,000 consumer petitions to the FCC yesterday reiterating those demands.

U.S. Sens. Mike DeWine, R-Ohio, and Herb Kohl, D-Wis., sent a letter to FCC chairman William Kennard and Federal Trade Commission chairman Robert Pitofsky yesterday asking the agencies to examine AOL Time Warner's use of technology that will let the merged company control access speeds to Web sites. The FTC is reviewing the combination for antitrust issues.

For example, using Cisco Systems routers, AOL Time Warner could slow Web traffic to Disney's ESPN Web site while speeding up traffic to its own CNN/Sports Illustrated site, the senators said.

Copyright 2000, Bloomberg L.P. All rights reserved.